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ARCHIVED -  Decision CRTC 99-480

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Decision

Ottawa, 28 October 1999
Decision CRTC 99-480
CKAY (1979) Radio Inc.
Duncan, British Columbia - 199808177
Canadian Broadcasting Corporation
Victoria, British Columbia - 199811542
O.K Radio Group Ltd.
Victoria, British Columbia - 199804993
Rogers Broadcasting Limited
Victoria, British Columbia - 199811105
Seacoast Communications Group Incorporated
Victoria, British Columbia - 199804003
4 May 1999 Public Hearing
in Vancouver
Introductory statement - Licensing new radio stations
The Commission held public hearings on 4 May 1999 in Vancouver and 28 June 1999 in the National Capital Region. These were among the first hearings at which the Commission considered competing applications for new radio licences after it adopted its new commercial radio policy in April 1998 (Public Notice CRTC 1998-41).
At each of these public hearings, the respective panels discussed with applicants general questions relating to the implementation of the commercial radio policy. The discussions focused on the factors that the Commission ought to consider when assessing competitive radio applications to serve a particular market, in light of the new commercial radio policy and the public interest.
In the context of the consultation with the full Commission required by the Broadcasting Act before decisions on applications are made, the Commission has found that the factors set out below will generally be among those relevant to the evaluation of competitive applications under the new policy. The relative weight and significance of the various factors will vary depending on the specific circumstances of the market concerned. The Commission will continue to consider whether the proposed use of the frequency is optimal in all the circumstances.
Factors relevant to the evaluation of applications
Quality of the application
In assessing this factor, the Commission will evaluate commitments in a number of areas. For example, the Commission will assess the overall business plan provided by the applicant, which includes the proposed format. Further, depending on the circumstances, it may be relevant to assess Canadian content commitments and if applicable, commitments related to the level of French-language vocal music.
The manner in which applicants intend to reflect their local community, including the community's diversity and distinctiveness, remains important. The Commission will therefore examine local programming proposals and the benefits that the applicant will bring to the community.
The new policy places emphasis on Canadian talent development (CTD). The Commission considers that the applicant's CTD proposals are important elements when the quality of the application is assessed.
Diversity of news voices in the market
This factor relates to concerns regarding concentration of ownership and cross media ownership. The Commission has stated in this regard that it seeks to strike a balance between its concerns for preserving a diversity of news voices in a market, and the benefits of permitting increased consolidation of ownership within the radio industry.
Market impact
The possibility that licensing too many stations in a market could lead to a reduction in the quality of service to the local community remains of concern to the Commission. The economic condition of the market and the likely financial impact of the proposed station upon existing stations in the market will therefore be relevant.
Competitive state of the market
Since the new radio policy permits one party to own more radio stations in a market than was the case under the previous policy, the new ownership limits increase the possibility of competitive imbalance in a radio markets. This factor will be relevant when evaluating applications for new commercial radio stations under the policy.
Importance of factors
As indicated above, the relative importance of each of these factors will vary in each case depending on the specific circumstances of the market concerned.
Summary of the decision
The Commission approves three applications for new FM stations on Vancouver Island. One station, operated by CKAY (1979) Radio Inc. (CKAY), will be located at Duncan and will serve the Cowichan Valley Regional District (the Cowichan Valley) with an adult contemporary format. This new station will replace CKAY, an AM station that the licensee now operates in Duncan.
The two other new FM stations will serve Victoria. One of these will be operated by O.K. Radio Ltd. (O.K. Radio) and will offer a country music format. This new station will replace CKXM, an AM station that O.K. Radio now operates.
Seacoast Communications Group Incorporated (Seacoast) will operate the other new station. It will provide Victoria residents with a modern rock and alternative music format. The application by Rogers Radio Broadcasting Limited (Rogers) proposed to use the same frequency as that of the Seacoast station and is therefore denied. However, the Commission notes that the Rogers application had many positive aspects and considers that the market could support the Rogers station as well as the others approved today. Although another FM frequency that Rogers could use was identified subsequent to the hearing, the Commission is of the view that such a proposal should be considered in a separate public process.
The Commission will issue a licence to each of CKAY, O.K. Radio and Seacoast expiring 31 August 2006, subject to the conditions specified in the licences to be issued.
In addition, the Commission approves in part an application by the Canadian Broadcasting Corporation (CBC) to add a transmitter at Victoria to rebroadcast the signal of CBUF-FM Vancouver. This new transmitter will make the Corporation's French-language "La Première Chaîne" network available to Victoria residents. However, the CBC proposed to use the same frequency as that approved for CKAY. The Commission has determined that the public interest is best served by the use of the frequency by CKAY. It therefore directs the CBC to file an amendment to the proposed technical parameters predicated on the use of another frequency.
Background
1. At the 4 May 1999 public hearing in Vancouver, the Commission heard five competing applications for new FM stations on Vancouver Island. Four of these applications proposed to serve Victoria, while one proposed to serve the Cowichan Valley.
2. The process for dealing with these applications was initiated after the Commission received applications by O.K. Radio and Seacoast for new FM stations to serve Victoria. Consistent with its practice, the Commission issued a call for applications from parties interested in using the frequencies proposed (Public Notice CRTC 1998-99, dated 25 September 1998).
The applications
3. CKAY applied to convert CKAY Duncan to 89.7 MHz on the FM band. The station would serve the Cowichan Valley with an adult contemporary format and feature local news and information.
4. The CBC proposed to use 89.7 MHz to rebroadcast the signal of CBUF-FM Vancouver, thus providing its French-language "La Première Chaîne" network to Victoria residents.
5. Since the CKAY and the CBC applications both proposed to use the same frequency, they were mutually exclusive on a technical basis.
Application for 91.3 MHz
6. O.K. Radio proposed to convert its AM station CKXM to the FM band. The new FM station would adopt CKXM's current country music format.
Applications for 107.3 MHz
7. Rogers proposed to convert its AM station CJVI to the FM band. The new station would serve Victoria with a format featuring a blend of gold-based adult contemporary music selections.
8. Seacoast proposed to establish a new FM station that would serve Victoria with a modern rock and alternative music format.
9. Since the Rogers and the Seacoast applications both proposed to use the same frequency, they were mutually exclusive on a technical basis.
The Commission's decision
The markets
Cowichan Valley Regional District
10. The Cowichan Valley lies between Victoria and Nanaimo. Approximately 75,000 people live in this area.
11. CKAY Duncan provides the only locally-oriented radio service to the Cowichan Valley. However, the applicant indicated that CKAY's current AM signal is unreliable in some areas of the market and that its AM transmitters need replacement. It considered that it would be more cost effective to convert CKAY to an FM station, and that such a conversion would allow it to serve the Cowichan Valley with a better quality, more reliable signal. The applicant noted, however, that no FM frequency had been allotted specifically to serve the Cowichan Valley.
Victoria
12. Three of the applicants (Seacoast, O.K. Radio and Rogers) proposed to establish new commercial FM stations to serve Victoria. Each of these applicants is already present in the market.
13. In light of the number of applications filed, the Commission needed to determine the extent to which the Victoria market could support the introduction of new FM stations. This matter was discussed extensively at the hearing.
14. The applicants were in general agreement that the market could support approval of all three commercial applications. A major reason for this is the business strategy that the various applicants adopted.
15. O.K Radio planned to continue CKXM's current country music format on its new FM station. As such, it should not have a significant impact on other stations in the market since none of them have formats based on country music and CKXM is already present in the market.
16. Rogers and Seacoast, on the other hand, based their business plans on the repatriation of audiences that currently listen to stations situated outside Victoria. Victoria residents currently tune extensively to out-of-market stations. According to the Fall 1998 Bureau of Broadcast Measurement (BBM) survey, approximately 35% of Victoria listening was to stations that were not located in the market. Seacoast considered that its proposed format based on modern and alternative rock would repatriate younger listeners. It submitted research indicating that a modern rock station would attract listeners in the 18-34 age group who are now tuning to stations in Vancouver or Seattle.
17. Rogers considered that its proposed format, which would provide music and information designed for people 45 years of age and over, would also repatriate listeners. It noted that in- market tuning by Victoria residents in that age range fell from 51% in Spring 1995 to 46% in Fall 1998, indicating a need for a station targeted to older listeners. Rogers also pointed to projections indicating that the percentage of the Victoria population over 45 years will increase from 40% in 1996 to 44% by 2004.
18. Applicants further noted that Victoria has fewer radio stations than other comparably sized markets, and that advertising revenues in the market were on the rise.
19. After examining the record, the Commission agrees that Victoria could accommodate the stations proposed by all of these applicants if an adequate number of frequencies were available.
Frequency considerations
20. As indicated earlier, the Commission received five applications to use three frequencies. Both the CBC and CKAY Radio proposed to operate on 89.7 MHz, while both Rogers and Seacoast proposed to operate on 107.3 MHz.
21. Although O.K. Radio was the only applicant who proposed to broadcast on 91.3 MHz, two parties submitted interventions in opposition to O.K. Radio's application because they hoped to use this frequency in the Vancouver area. Specifically, Simon Fraser University (Simon Fraser) pointed out that it had applied for a new campus station in Burnaby using 91.3 MHz. The CBC indicated that it had applied for this frequency to establish its proposed Radio Three service in Vancouver. (The Commission notes that the Corporation has since amended this application to use another frequency.) Both the CBC and Simon Fraser considered that it was unfair for the Commission to approve the O.K. Radio application before it considered their applications.
22. In addition, CKAY Radio was concerned that O.K. Radio proposed to use a transmitter site at Malahat. An FM station there would put an excellent signal into the Cowichan Valley, and CKAY considered that this additional competition would be detrimental to its operations.
23. All applicants were asked at the hearing whether they would be willing to use different frequencies for their proposed stations. After the oral phase of the hearing, three of the applicants, O.K. Radio, Rogers and Seacoast (the joint submitters) submitted a proposal outlining how they considered that each of their applications could be licensed while addressing the concerns of CKAY, the CBC and Simon Fraser.
24. In a decision letter dated 2 August 1999, the Commission determined, pursuant to the CRTC Rules of Procedure, that it was in the public interest to accept the additional correspondence for the public record. In the same decision, the Commission established procedures for CKAY, the CBC and Simon Fraser to comment on the proposal, and for the joint submitters to reply to the comments. The Commission notes that correspondence received after 20 August did not form part of the record of this proceeding.
25. According to the joint submitters' proposal, the CKAY, Seacoast and O.K. Radio applications would be licensed using the frequencies that they originally applied for. They also suggested that the Rogers application would be licensed to operate on 88.9 MHz, a frequency not previously contemplated by the applicants.
26. The joint submitters noted that CBC's application was for a retransmitter for its French-language "La Première Chaîne" service. This service provides a monophonic rather than a stereophonic signal. The joint submitters therefore considered that the CBC application could be accommodated using an AM frequency. O.K. Radio and Rogers indicated that they would provide to the CBC at a price of one dollar per year either of the transmitters sites that would become available if their FM applications were approved.
27. O.K. Radio considered that Simon Fraser's application could be licensed using the second adjacent frequency to 91.3 MHz. The joint submitters also stated that if all three commercial stations were approved, two of the applicants would be willing to bear the technical analysis costs reasonably incurred by Simon Fraser to prepare a technical brief in relation to the second adjacent channel to 91.3 MHz.
28. CKAY, the CBC and Simon Fraser each commented on the joint submitters' proposal. CKAY indicated that it was still opposed to any new commercial FM station on the Malahat site. In reply, the joint submitters indicated that they would accept a condition of licence specifying that any new FM station broadcasting from the Malahat site not solicit advertising in the Cowichan Valley.
29. Simon Fraser considered that the joint submitters' proposal was inconsistent with the designation of the 88 MHz - 92 MHz band as educational, non-commercial frequencies. The Commission notes in this regard that the designation of frequencies as "educational, non-commercial" is Industry Canada's responsibility and that Industry Canada approved the use of these frequencies in Duncan and Victoria as proposed by the applicants. Simon Fraser indicated that it would be willing to consider any technical information that the joint submitters might provide to demonstrate the feasibility of using an alternative frequency to provide its service. Simon Fraser stated, however, that it could not withdraw its opposition until it received the technical information and had an opportunity to assess it.
30. The CBC opposed the joint submitters' proposal on both procedural and technical grounds. It submitted, among other things, that use of the 88.9 MHz frequency should not be considered at this time since use of that frequency has not been the subject of any public hearing process to date. It further noted that the CBC had recently filed a new application for a Victoria transmitter for its French-language "La Chaîne culturelle" stereophonic service that would use the 88.9 MHz frequency. The CBC also opposed the suggestion that it use an AM transmitter in Victoria for its "La Première Chaîne" service. It stated that the joint submitters failed to disclose the substantial additional capital and operating costs that the CBC would have to assume if it were to use an AM rather than an FM transmitter.
31. In addition, the CBC submitted that the Commission should be concerned that the joint submitters' proposal fails to take into account the broadcasting policy for Canada set out in subsection 3(1) of the Broadcasting Act, particularly paragraph 3(1)(m) and (n).
32. The CBC noted that paragraph 3(1)(m) requires that the English and French programming provided by the CBC "be made available throughout Canada by the most appropriate and efficient means and as resources become available for the purpose" [section 3(1)(m)(vii)].
33. Paragraph 3(1)(n) states that "where any conflict arises between the objectives of the Corporation set out in paragraphs (l) and (m) and the interests of any other broadcasting undertaking of the Canadian broadcasting system, it shall be resolved in the public interest, and where the public interest would be equally served by resolving the conflict in favour of either, it shall be resolved in favour of the objectives set out in paragraphs (l) and (m)."
34. In reply, the joint submitters noted that their proposal includes an option which would allow the CBC to expand its French-language programming in Victoria through the use of an AM frequency. They submitted that this would represent an efficient and effective use of scarce radio frequencies which would clearly serve the public interest. They submitted that the CBC has misinterpreted paragraph 3(l)(n), and stated that the provision clearly states that any conflict is to be resolved in the public interest, and that it is only where the public interest would be equally served that the objectives in paragraphs 3(1)(l) and (m) shall prevail.
35. The Commission considers that it would not be appropriate to licence an applicant on the basis of the 88.9 MHz frequency as part of this proceeding. Applications for use of the 88.9 MHz frequency should be the subject of a separate public process.
Conclusions
36. In light of the above, the Commission makes the following determinations.
Applications for 89.7 MHz
37. The Commission notes the CBC's argument that use of 89.7 MHz for "La Première Chaîne" (rather than for CKAY) is most appropriate, particularly in light of the fact that the service is available in other parts of the province exclusively on the FM band. CBC also submitted that use of 89.7 MHz by the CBC is the most efficient way of serving Victoria, given "the huge costs associated with using the AM band," and that it is the appropriate resolution of the conflict over use of the frequency, consistent with paragraph 3(1)(n) of the Act.
38. The Commission, however, considers that the CBC should not rule out the AM band for providing the CBC's "La Première Chaîne" service to the Victoria area, particularly since it is a monophonic service.
39. O.K. Radio and Rogers offered the CBC the use of one of their AM transmitter facilities for one dollar per year. Both the AM frequencies that they would release, if their conversion applications were approved, are very good. The offer would appear to address the Corporation's concerns about capital costs to establish an AM transmitter and the availability of a good AM frequency.
40. In light of sections 3(1) and 5(2) of the Act, the Commission considers that the public interest in this case is best served by the use of 89.7 MHz by CKAY. It is important that the Cowichan Valley be served by a locally-oriented radio station. In this regard, the Commission considers that using the FM band would be the most efficient way to provide a high quality signal to the area. The Commission therefore approves CKAY's application for an English-language FM radio programming undertaking at Duncan.
41. The new station, which will replace the AM station CKAY, will make a reliable, high quality signal available to residents of the Cowichan Valley, allowing the licensee to continue to provide a valuable local radio service. CKAY will also contribute a minimum of $400 per year to a local initiative for Canadian talent development. Adherence to this commitment is a condition of licence.
42. The Commission authorizes the licensee, by condition of licence, to simulcast the programming of CKAY on the new FM station for a transition period of four months following implementation. At the end of this period, the Commission expects the licensee to surrender CKAY's licence for cancellation by the Commission.
43. CKAY requested that it not be subject to the standard condition of licence regarding local programming and advertising. The Commission, however, considers that CKAY does not meet the criteria for relief from this condition that are set out in Public Notice CRTC 1993-38. Therefore, the Commission will impose the standard condition of licence for commercial FM stations that provides that the licensee must refrain from soliciting or accepting local advertising for broadcast during any broadcast week when less than one third of the programming aired is local.
44. The licence will only be issued and effective when the new station is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the station is not constructed and ready to operate within 12 months of today's date, extensions to this time frame may be granted provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.
45. As proposed, the new FM station will operate on the frequency 89.7 MHz, channel 209B, with an effective radiated power of 1,862 watts.
46. The Department of Industry has advised the Commission that this application is conditionally technically acceptable. The Department will only issue a Broadcasting Certificate once it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.
47. In accordance with section 22(1) of the Broadcasting Act, the Commission will only issue the licence and grant the authority to operate when it receives notification from the Department of Industry that its technical requirements have been met, and that a broadcasting certificate will be issued.
48. In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled Implementation of an Employment Equity Policy, the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.
49. With respect to the CBC application, the Commission notes that "La Première Chaîne" provides a monophonic rather than a stereophonic signal. It is possible to accommodate the service on an AM frequency. As noted earlier, the joint submitters have made a commitment to provide the CBC a transmitter facility at a price of one dollar per year so that the licence for CBUF-FM Vancouver could be amended to add a retransmitter at Victoria. In light of the apparent availablity of other frequencies, particularly on the AM band, the Commission approves in part the application by the CBC and directs the Corporation to file, within six months of this decision, an amendment to the proposed technical parameters predicated on the use of another frequency. The amendment to the licence of CBUF-FM Vancouver will not take effect until amended proposed technical parameters are filed with and approved by the Commission.
Application for 91.3 MHz
50. The Commission approves the application by O.K. Radio for an English-language FM programming undertaking at Victoria. The Commission notes that applicant plans to continue CKXM's current country music format.
51. With regard to the factors set out in the introductory statement, the Commission considers that O.K. Radio has submitted a high quality application that includes significant contributions to Canadian talent development. O.K. Radio confirmed that it would participate in the Canadian talent development plan created by the Canadian Association of Broadcasters for expenditures to be allocated to third parties. The minimum expenditure for the Victoria market is $5,000 per year. The applicant also made a commitment to spend $20,000 annually to promote local talent through the establishment of its "Vancouver Island Roots" initiative. This project will support local country/folk artists and will include the production of an annual compilation CD. Adherence to these commitments will be required by condition of licence.
52. The Commission authorizes the licensee, by condition of licence, to simulcast the programming of CKXM on the new FM station for a transition period of four months following implementation. At the end of this period, the Commission expects the licensee to surrender CKXM's licence for cancellation by the Commission.
53. The Commission also expects the licensee to honour its commitment not to solicit advertising in the Cowichan Valley. As well, the Commission expects O.K. Radio to fulfil its commitment to work with Simon Fraser to develop a proposal for the use by Simon Fraser of the second adjacent FM channel to 91.3 MHz to establish a campus radio station in the Burnaby - Vancouver area.
54. The Commission further expects O.K. Radio to fulfill its commitment to offer its AM transmitter facilities to the CBC at a cost of one dollar per year.
55. The licence will only be issued and effective when the new station is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the station is not constructed and ready to operate within 12 months of today's date, extensions to this time frame may be granted provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.
56. As proposed, the new FM station will operate on the frequency 91.3 MHz, channel 217C, with an effective radiated power of 1,766 watts.
57. The Department of Industry has advised the Commission that this application is conditionally technically acceptable. The Department will only issue a Broadcasting Certificate once it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.
58. In accordance with section 22(1) of the Broadcasting Act, the Commission will only issue the licence and grant the authority to operate when it receives notification from the Department of Industry that its technical requirements have been met, and that a broadcasting certificate will be issued.
59. In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled Implementation of an Employment Equity Policy, the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.
Applications for 107.3 MHz
60. After carefully reviewing both applications, the Commission considers that the application by Seacoast represents the best use of the 107.3 MHz frequency. The Commission therefore approves Seacoast's application for an English-language FM radio programming undertaking at Victoria.
61. With regard to the factors set out in the introductory statement, the Commission notes that Seacoast has been operating CFAX, a stand-alone AM station in the market, for many years, providing an important service to residents of Victoria. An FM station will allow it to compete more effectively with the other companies operating commercial radio stations in the market, all of whom own at least one FM station. Licensing this station will therefore improve the competitive balance in the market.
62. The Commission also considers that Seacoast's modern rock and alternative music format will help reflect the diversity of the community by adding a youth-oriented format that will repatriate younger listeners now tuning to stations in Vancouver and Seattle.
63. The Commission considers that Seacoast has submitted a high-quality application and is of the view that the new station will make significant contributions to the development of Canadian talent. Seacoast will participate in the Canadian talent development plan created by the Canadian Association of Broadcasters for expenditures to third parties. The minimum expenditures for a station in the Victoria market are $5,000 per year. In addition, the applicant will spend $17,000 per year in this area, including $14,000 per year on a new music festival and $3,000 per year for a Songwriter's seminar. The Commission is making adherence to these commitments a condition of licence.
64. The licence for Seacoast will only be issued and effective when the new station is ready to begin operation. When the licensee has completed construction and is prepared to commence operation, it must advise the Commission in writing. If the station is not constructed and ready to operate within 12 months of today's date, extensions to this time frame may be granted provided that the licensee applies in writing to the Commission before the 12-month period or any extension of that period expires.
65. As proposed, the new FM station will operate on the frequency 107.3 MHz, channel 297B, with an effective radiated power of 20,000 watts.
66. The Department of Industry has advised the Commission that this application is conditionally technically acceptable. The Department will only issue a Broadcasting Certificate once it has determined that the proposed technical parameters will not create any unacceptable interference with aeronautical NAV/COM services.
67. In accordance with section 22(1) of the Broadcasting Act, the Commission will only issue the licence and grant the authority to operate when it receives notification from the Department of Industry that its technical requirements have been met, and that a broadcasting certificate will be issued.
68. The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996 (1996 EEA), and therefore files reports concerning employment equity with Human Resources Development Canada. As a result of a consequential amendment to the Broadcasting Act, the Commission no longer has the authority to apply its employment equity policy to any undertaking that is subject to the 1996 EEA.
69. The application by Rogers proposed to use the same frequency as the Seacoast application and is denied. As noted above, the use of 88.9 MHz was raised as an alternative by some parties. However, as indicated earlier in this decision, the Commission does not consider that it would be appropriate, in these circumstances, to approve the use of a frequency that was not part of the current process. However, the Commission considers that the Rogers application had many positive aspects and that the market could support the new station proposed by Rogers in addition to the others approved today. The Commission notes that it is open to Rogers to refile its application on the basis of a different frequency.
70. The Commission has considered all of the supporting and opposing interventions submitted with respect to these applications.
Related CRTC documents
" Public Notice 1999-137: New licence form for commercial radio stations
" Public Notice 1998-99: Call for applications for a broadcasting licence to carry on a radio programming undertaking to serve Victoria
" Public Notice 1998-41: Commercial Radio Policy, 1998
This decision is to be appended to each licence. It is available in alternative format upon request, and may also be viewed at the following Internet site:

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